Monday, June 15, 2009

S&P 500 Index Review - 15.06.2009

Trend is intact - Old News some would say. Anyway I like the trend channel as it is narrowing the range even more.

Bullish facts: the 21-DMA is tracking nicely the rise in stocks and the 21/200-DMAs Golden Cross and also the pending 55/200-DMAs cross are enough of evidence for the strength in the recovery of this major index. I would also interpret the fall in Volume which is in accordane with the record low readings of the Volatility Index and the TED spread as Risk appetite is not fading. Actually low volatility and Volume are characteristic to trend continuation.

Note the RSI is also trending higher and only the ADX (23.23) bothers me as it is fading a bit lower. However if it was above 30 it would produce a parabolic move and this maybe is correct to be viewed as actually a sustainable trending.

Bearish case would be activated first on any close below 21-DMA. Next I assume we will see some reaction at the 1007 level whch is the November '09 high and then if broken the 1044 High.
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The Weekly chart view has the first impression we are building a very steep Bearish Rising Wedge patern. Here is a clear confluence of Resistance level around 1007 - previous top + Wedge Resistance line top.

RSI is trending up after a successful bounce off the 50 level. ADXhas already given Long signal after the DI+ crossed over the DI- so we remain in trend-following mode until there is a change to observe and act upon.

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